The production cycle of the beef industry has changed over the past 30 years with the introduction of feedlots. Feedlots are defined as 'a confined yard area with watering and feeding facilities where cattle are completely hand fed or mechanically fed for the purpose of production'.

Feedlots made their first appearance in the USA in the 1920s but it was not until the 1950s that Australia began experimenting with the concept. In the mid-1960s commercial feedlotting started on the Darling Downs in Queensland. This industry within an industry was born out of a demand from overseas customers, for a specifically tailored, consistently high quality, year round product.

Traditionally, Australian consumers have preferred leaner beef while some markets, especially the Japanese, prefer high levels of marbling in their beef. To meet these requirements, along with a growing domestic demand, cattle raised on pastures are 'finished' on a highly nutritious diet of grain feed prior to slaughter or live export. Barley and sorghum are the most common grains used. Cattle stay on this feed for periods varying from about 30 days up to about 300 days depending on the level of marbling and weight required by the particular customer.

Despite a setback to its evolution in 1975, when access to the Japanese market closed temporarily, the feedlot industry in Australia had grown to 830 feedlots by 1996 when accreditation first commenced. Since then, a significant number of mainly small lots have ceased operations or not achieved nor sought accreditation. As a result, the number of accredited feedlots was down to 710 by June 2000 and down further to 575 by March 2004. It is expected that over the next year or two this figure will increase slightly and eventually stabilise at about the 600 mark.

In contrast to the declining number of feedlots, total feedlot carrying capacity had risen to a record high of 926,000 head as at 31 March 2004. Numbers on-feed were reported to be 666,000 head (72% of total carrying capacity), nearly half of which was in Queensland and over a third in New South Wales. Of total capacity, 55% was held by 23 feedlots, each with a licensed capacity of 10,000 head or more. At the other extreme, 17% was held by about 481 feedlots, each with a licensed capacity of less than 1,000 head.

Most of the cattle being held on feedlots at 31 March 2004 were destined for the Japanese market (which was expected to consume 356,000 head or 53% of available supply). The next biggest market was the domestic market (which was expected to consume around 249,000 head or 37% of available supply).